U.S. challenges Chinese auto part export subsidies

Tuesday, September 18, 2012

The White House on Monday requested dispute settlement consultations with China at the World Trade Organization concerning China’s auto and auto parts “export base” subsidy program.
Under the program, the United States said China provides extensive subsidies to auto and auto parts producers located in designated regions, known as “export bases,” that meet export performance requirements.
“The subsidies provide an unfair advantage to auto and auto parts manufacturers located in China, which are in competition with producers located in the United States and other countries,” the Office of the U.S. Trade Representative said. “Based on publicly available documents, ‘export bases’ made at least $1 billion in subsidies available to auto and auto-parts exporters in China during the years 2009 through 2011.”
“The export subsidy program that we are challenging today is implemented through dozens of Chinese legal instruments,” said U.S. Trade Representative Ron Kirk, in a statement. “We are in a position to address this trade problem because the administration’s newly created Interagency Trade Enforcement Center (ITEC) has provided crucial investigative and analytical resources to this effort. This is one example of how ITEC, relying on a whole-of-government approach, is expanding and accelerating the United States’ trade-enforcement capabilities and activities.”
In addition, the United States on Monday requested the WTO establish a dispute settlement panel to address China’s imposition of antidumping and countervailing duties on more than $3 billion in exports of American-produced automobiles.
“The United States and China tried to resolve the matter following the U.S. request for formal dispute settlement consultations in June, but the consultations did not succeed. Therefore, the United States is taking the next step in the WTO dispute settlement process,” USTR said.
These actions are the latest in a series of enforcement efforts taken by the Obama administration against China in the WTO.
In 2010, the United States challenged China’s local-content subsidies to its wind power equipment manufacturers, resulting in China’s revocation of the subsidy program. In three separate WTO disputes initiated between 2009 and 2011, the United States is challenging unfairly imposed duties China places on U.S.-made automobiles, steel products, and poultry.
Earlier this year, the United States successfully concluded a challenge to China’s export restraints on key industrial raw materials and, in March, launched a dispute against China’s export restraints on “rare earths,” a class of raw materials used in high-tech and clean-energy products.
In July, the United States prevailed in its challenge against China’s market access restrictions on U.S. providers of electronic payment services. The request for consultations also includes transparency-related claims addressing China’s failure to notify the subsidies at issue to the WTO.